Specification of the forebrain, midbrain and hindbrain primordia occurs during gastrulation in response to signals that pattern the gastrula embryo. Following establishment of the primordia, each brain part is thought to develop largely independently from the others under the influence of local organizing centers like the midbrain-hindbrain boundary (MHB, or isthmic) organizer. Mechanisms that maintain the integrity of brain subdivisions at later stages are not yet known. To examine such mechanisms in the anterior neural tube, we have studied the establishment and maintenance of the diencephalic-mesencephalic boundary (DMB). We show that maintenance of the DMB requires both the presence of a specified midbrain and a functional MHB organizer. Expression of pax6.1, a key regulator of forebrain development, is posteriorly suppressed by the Engrailed proteins, Eng2 and Eng3. Mis-expression of eng3 in the forebrain primordium causes downregulation of pax6.1, and forebrain cells correspondingly change their fate and acquire midbrain identity. Conversely, in embryos lacking both eng2 and eng3, the DMB shifts caudally into the midbrain territory. However, a patch of midbrain tissue remains between the forebrain and the hindbrain primordia in such embryos. This suggests that an additional factor maintains midbrain cell fate. We find that Fgf8 is a candidate for this signal, as it is both necessary and sufficient to repress pax6.1 and hence to shift the DMB anteriorly independently of the expression status of eng2/eng3. By examining small cell clones that are unable to receive an Fgf signal, we show that cells in the presumptive midbrain neural plate require an Fgf signal to keep them from following a forebrain fate. Combined loss of both Eng2/Eng3 and Fgf8 leads to complete loss of midbrain identity, resulting in fusion of the forebrain and the hindbrain primordia. Thus, Eng2/Eng3 and Fgf8 are necessary to maintain midbrain identity in the neural plate and thereby position the DMB. This provides an example of a mechanism needed to maintain the subdivision of the anterior neural plate into forebrain and midbrain.